Some time back I read an article by MediaPost editor Joe Mandese which postulates, and I think correctly, that the current slump in mass media revenues owes not merely to an economic slowdown but to an accelerating shift away from newspapers and broadcast to online. Economists call these secular and cyclical shifts, respectively, and the combination is like a one-two punch that has mass media reeling. Here’s what I fear — that there is no bounce-back from this slowdown. Unlike past recessions, if it’s time to use that word, mass media revenues will not bounce back of their own accord. Advertisers who try the new, more- targeted and presumably lower-cost online options — the search engines and the social networks — are likely to forever decrease mass media budgets.
Mandese’s piece in MediaPost is not quite so pessimistic but there is a dour note in the observations of the story’s central source, TNS Media Intelligence advertising economist Jonathan Swallen. He says the consumers seem to have closed their checkbooks, at least for now:
There are some things that are different about this slowdown . . . it is consumer-led. The last big turndown that we had in 2001, post-9/11 and the dot-com bust wasn’t so much of a consumer-led slowdown. There were other economic factors. This one feels different. What we’re in right now is a period in which consumers are stressed and strained by rising food prices, rising fuel prices, a crunch on credit, and a feeling that things will get worse before they get better. Without a rise in consumer spending, that [disincentivizes] marketers from ramping up consumer ad spending.
The latter statement is so obviously true it inhibits us from asking the what-if question — what if this is a tipping point beyond and consumers can no longer sustain the growing rate of consumption upon which the economy, and thus advertising, depend?
I’ll leave that a pregnant question for now.
Oops. Let me add one more comment by Mandese as a reminder for follow-up research. He writes that:
Other advertising economists are expected to weigh in with their predictions soon, including Interpublic analysts Bob Coen and Brian Wieser. Coen, who has served as the ad industry’s chief source for advertising spending estimates for decades, has historically tracked the industry’s growth relative to the growth of the U.S. gross domestic product.
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Meanwhile, in everyday life, I’m pretty darned certain that my PC has been slammed by a virus or spyware that resists both the downloadable and shrink-wrapped anti-virus software to which I have access. I have some contacts in the security community who, while they don’t make house calls, may take a look at my machine. I got a call last week at the office from a woman who described similar symptoms — the infection first presented as a (false) warning from the PC’s security center “You have been infected . . . go here to download . . .” I did not follow that misdirection. The caller did. Her PC, she says, is “fried.” Not a particularly good diagnostic but I understand that she cannot so much as boot up. I have been trying to work around and/or expunge this thing, but am losing the battle. In fact I am blogging today on a Mac so as to avoid the annoyance.